Can anyone explain Consumer credit Act 2008

[rhino666]

and how it's been altered from the 1974 one.

 

Just been told by trading standards that even under civil procedure rules and S77/78 a bank can still reconstruct an agreement. That doesn't sound right to me.

[sequenci]

The 2006 act amends part of the 1974 act (which is still the main one, so to speak).

 

The key changes brought in by it are:

 

1 October 2006

 

Default notices:

 

•The minimum period to respond to default notices is extended from 7 to 14 days.

 

6 April 2007

 

Financial Ombudsman Service

 

•Under the Consumer Credit Act 2006 there are new rights to complain to the Financial Ombudsman Service about how a lender or debt-collection agency has dealt with a client's account. Clients have to follow the lender's complaints procedure first.

•This applies to complaints about any business with a standard consumer credit licence e.g. debt collectors, debt management companies, credit reference agencies etc.

•This applies to new complaints that take place on or after April 6th 2007 about any consumer credit regulated agreement.

•Businesses must have in place and operate complaints handling procedures that comply with the rules.

•Businesses have eight weeks to resolve a complaint and the client can complain to the FOS if they are not happy with the outcome.

•If the complaint is not resolved within 8 weeks, a "final response" letter must be sent and the customer informed of their right to complaint to FOS.

•FOS can order compensation. Each business gets two "free cases" a year but they are then charged £400 a go.

Re-classificaiton of the term "individual"

 

•Partnerships of more than three people are excluded from the definition "individual" and therefore from regulation.

Unfair relationships

 

•The existing extortionate credit bargain provisions are replaced with a new unfair relationship test. This looks at the whole relationship between the parties and looks at the conduct of the creditor before and after the agreement. "Unfairness" is not defined.

•Applies to new agreements taken out from 6 April 2007 (and then applies to existing agreements from 6th April 2008.)

•The burden of proof is on the creditor.

•Applies to all credit agreements, not just regulated agreements (except for first mortgage and agreements that are not with "individuals".)

•The court can order:

- repayment of sums paid by the debtor,

- require the creditor to do something in relation to the agreement

- reduce or discharge any future sum payable under the agreement

- order return of property provided by a guarantor

- change the terms of the credit agreement.

Enforceability of agreements

 

•Section 127(3) is abolished. This relates to the automatic unenforceability of agreements for non-compliance with certain requirements of the Act. However, it only applies to new agreements from 6 April 2007. The court will have to power to use discretion in all cases.

•Agreements where the prescribed terms are missing will no longer be automatically unenforceable.

•Cancellable agreements (s67) will no longer be automatically unenforceable where the creditor has failed to provide the correct cancellation notices.

•The court will be able to make an enforcement order in respect of an improperly executed agreement or dismiss the creditor's application. Itwill take into account a ny prejudice caused and the d egree of culpability

•The court has the power to:

- reduce any sum payable or wipe out the debt

- make an order for parties to do certain things under the agreement

- amend any term of the agreement as a consequence.

6 April 2008

 

Abolition of the financial limit for consumer borrowing and hiring:

 

•The £25,000 limit is removed, making all applicable agreements Consumer Credit Act regulated. (Pre-6 April 2008 agreements above £25,000 remain outside CCA regulation.)

New exemptions from regulation:

 

•"High net worth" borrowers (i.e. with a net income of £150,000 or more) can decide to opt out of CCA regulation.

•Credit and hire agreements where the amount of credit or the hire payments required exceed £25,000 and the agreement is 'predominantly' for business Purposes are also exempt. According to issue 11 of Arian, agreements are assumed to be for predominantly business purposes where the borrower signs a declaration to that effect unless it can be shown that the creditor or owner knew, or had reasonable reason to suspect, that the agreement was not predominantly for business purposes. It is intended that all buy-to-let mortgages of more than £25,000 will also be exempt from 1 October but this has yet to be established.

•Both the categories above would still be covered by the unfair relationship provisions.

The Office of Fair Trading has produced a publication called Consumer Credit - Regulated and Exempt Agreements. It provides more information on exempt agreements. Click here to read it.

 

 

 

Extension of the unfair relationships test

 

•The unfair relationship test now applies retrospectively to all agreements whenever they were made (apart from pre 6 April 2007 agreements that were paid in full before 6 April 2008.)

Licensing changes:

 

•A revised fitness test for CCA licensees was introduced which allows the OFT to asses the competence of a business, looking ahead to likely future behaviour as well as past conduct. It includes irresponsible lending as a possible example of an improper business practice. The OFT guidance for licensees and applicants on fitness and requirements can be found here.

Increased power for the OFT:

 

•The OFT has had additional powers (outlined in sections 23, 26-54 and 62 and 64) to deal with malpractice by licence holders by imposing conditions on them as an alternative to the draconian remedy of revoking their licences.

1 October 2008

 

Post-contract transparency requirements

These also apply to all pre 1 October 2008 agreements.

 

Annual statements under fixed-sum credit agreements:

 

•The statements are to be given annually and must contain prescribed information (with additional information for "home credit" agreements (i.e. where repayments are collected at the client's home.)

•This provision does not apply to small or non-commercial agreements

•Non-compliance would mean that during the period of non-compliance, the agreement is unenforceable and the debtor is not liable to pay any interest or default sums that have accrued over that time.

•For all agreements signed before 1 October 2008, the annual statement must be sent within one year of 1 October 2008.

Additional information in statements for running-account credit:

 

•Creditors are already required to supply periodic statements for these agreements. Now they must include information on:

◦The consequences of not making minimum payments.

◦The consequences of only making minimum payments.

◦How payments are allocated.

•This provision does not apply to small or non-commercial agreements.

Arrears notices for fixed-sum credit:

 

•Under this provision, creditors and owners must give notice of sums in arrears within 14 days or their accrual.

•They must include prescribed information and be accompanied by the OFT "information sheet" on arrears.

•Further notices must be send every six months unless the arrears are repaid of a CCJ obtained.

•Non-compliance would mean that during the period of non-compliance, the agreement is unenforceable and the debtor is not liable to pay any interest or default sums that have accrued over that time

•The service of the arrears notice, triggers the debtor's right to apply for a time order.

•This provision does not apply to small or non-commercial agreements.

•Also applies to pre 1 October 2008 agreements but the obligation to send the first arrears notice will not arise until at least two payments have fallen due after the section has come into force.

Arrears notices for running-account credit:

 

•Under this provision, creditors and owners must give notice of sums in arrears within 14 days or their accrual.

•They must include prescribed information and be accompanied by the OFT "information sheet" on arrears. A simpler form is to be send when the arrears are less than £2.

•Further notices must be send every six months unless the arrears are repaid of a CCJ obtained.

•Non-compliance would mean that during the period of non-compliance, the agreement is unenforceable and the debtor is not liable to pay any interest or default sums that have accrued over that time.

•The service of the arrears notice, triggers the debtor's right to apply for a time order.

•This provision does not apply to small or non-commercial agreements.

•Also applies to pre 1 October 2008 agreements but the obligation to send the first arrears notice will not arise until at least two payments have fallen due after the section has come into force.

Notices of default sums:

 

•Creditors and owners must send notice of a default sum (charge) that has been added to the account within 35 days of the charge being made.

•The notice must include prescribed information.

•Interest is not chargeable on the default sum for the first 28 days after the notice was given to the debtor.

•Non-compliance would mean that during the period of non-compliance, the agreement is unenforceable and the debtor is not liable to pay any interest on default sums charged during that time.

•This provision does not apply to small or non-commercial agreements.

•Also applies to pre 1 October 2008 agreements but it will only apply to default sums which become payable after section comes into force.

Definition of default sum:

 

•The Act also defines the term default sum. It says it is a sum payable by a debtor or hirer in connection with the breach of a regulated agreement (e.g. a late payment fee or charge for exceeding credit.)

•It does not include interest charged on late or missed payments.

Interest on default sums:

 

•Interest must be simple interest, not compounded.

•Interest can not be changed for the first 28 days after notice was given.

•Compound interest is still chargeable on missed/late payments, i.e. arrears.

Default notices:

 

•The act stipulates that additional information is to be included in default notices.

•Default notices must still be send on paper, not electronically.

•The creditor must provide the OFT "information sheet" on defaults.

Notices relating to post-judgment interest:

 

•Where the agreement permits the creditor to charge post-judgment contractual interest, the creditor must give notice of their intention to do this and provide further notices every six months.

•Post-judgment contractual interest can be charged from the date the first notice was given.

•The notices must include prescribed information

•Non-compliance would mean that not post-judgment interest can be charged until notice has been given.

•These regulations only apply to pre 1 October agreements if judgment was entered on or after 1 October 2008.

For details on the post-contract transparency requirements, such as the prescribed terms, see the OFT document here.

 

Time orders:

 

•Under the new regulations, debtors can apply for time orders sooner - upon receipt of an arrears notice.

•The debtor must give the creditor 14 days' notice in writing of their intention to apply for a time order.

•They must also include a repayment proposal. Note: no notification is necessary where a default notice has already been served.

•Also applicable to pre 1 October 2008 agreements.

New licensing categories:

 

•Consumer credit licences are now required for debt administration and credit information services.

[rhino666]

Excellent. Long but at least you simplied it. Thank you.

 

So it looks like basically everything is up to a judge now.

[rhino666]

So would I be right in saying that if a creditor can't find your CCA it's not automatically unenforceable until such times as they find it. If that is the case that's a bloody big change to the law.

and I'm also assuming the 2008 amendment is for new agreements not old ones. Is that right ?

Edited November 25, 2010 by rhino666

[rhino666]

Anyone ?

[sequenci]

So would I be right in saying that if a creditor can't find your CCA it's not automatically unenforceable until such times as they find it. If that is the case that's a bloody big change to the law.

and I'm also assuming the 2008 amendment is for new agreements not old ones. Is that right ?

 

Depends on the section.

 

any prost 6th April '07 agreements can be declared unenforceable by leave of the court.

[rhino666]

So the idea of no CCA = unenforceable or 12+2 days or until such times as it turn up is now gone. Is that right.

Edited November 26, 2010 by rhino666

[sequenci]

So the idea of no CCA = unenforceable or 12+2 days or until such times as it turn up is now gone. Is that right.

 

Yeah, pretty much. The Mcguffick case has given a narrow definition of the term 'enforcement' which means that a creditor can still press you whilst the agreement hasn't been furnished.

[victoria_siempre]

Hi rhino

 

But it depends what one means by 'enforcement'.

 

Read the depths of the Waksman judgement that a CCJ cannot be granted without a CCA or valid grounds for its absence (like it got lost in a fire, or my dog ate it).

 

This is, I think, why they're still twitchy when they cannot produce a signed document. For a sec 78 CCA request, any old crap will do. They can 'enforce' = harass; but they are not sure that they will succeed without a lawfully executed agreement. One can test this in a long game prior to court action; one need not rush to judgement.

 

best wishes

 

vic

[rhino666]

Ahhhhhh I see. I'm one of those whose creditor has lost the CCA and the appointed DCA are trying their best with templated letters but wont admit they haven't got a CCA So I'm sitting tight.

 

I know I'm not unique by a long stretch in being in this situation so I'm surprised more people haven't questioned it.

[sequenci]

Aha!

 

Although a reconstituted agreement is find for a s77-79 request they would need to provide your agreement if challenged at an actual court hearing.

[victoria_siempre]

Hi rhino

 

A nod's as good as wink to a blind donkey (and, for the avoidance of doubt, this is not aimed at Donkey).

 

Lots of love

 

vic

[sequenci]

Hi rhino

 

A nod's as good as wink to a blind donkey (and, for the avoidance of doubt, this is not aimed at Donkey).

 

Lots of love

 

vic

 

HAHA. Reminds me of Wilson Dixon (google him!)

[rhino666]

I've got a DCA without CCA pushing all the wrong buttons at the mo. They're pushing their luck and I'm quite happy to speak to relevant authories about them.

 

[rhino666]

Hi rhino

 

A nod's as good as wink to a blind donkey (and, for the avoidance of doubt, this is not aimed at Donkey).

 

Lots of love

 

vic

 

Thank you.